“I Don’t Think That It Is Possible to Predict What Withdrawal Rates Will Survive. The Best That You Can Do Is to Assign Probabilities to Various Different Possibilities, Based on What Has Happened in the Past. When the CAPE Value is 8, the Safe Withdrawal Rate is 9.0 and the Odds of a Plan Calling for a 4 Percent Withdrawal Surviving are Very, Very High. When the CAPE Value is 44, the Safe Withdrawal Rate is 1.6 and the Odds of a Plan Calling for a 4 Percent Withdrawal Surviving Are Not at All Good.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“I intend to continue to say that the Greaney study lacks a valuation adjustment.”

We know that.

Because there is a lot of evidence that you are good at repeating that.

But there is also a lot of evidence that you are not good at articulating a reason why it should contain a valuation adjustment.

You continue to say that because it is easy.

It is more difficult to explain why it should contain an adjustment.

And it is much more difficult to conduct a study that predicts what future withdrawal rates will survive.

JFK said “We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard”

The hocus equivalent would be “I choose to repeat the same things over and over again because it is easy”

I don’t think that it is possible to predict what withdrawal rates will survive. The best that you can do is to assign probabilities to various different possibilities, based on what has happened in the past. When the CAPE value is 8, the safe withdrawal rate is 9.0 and the odds of a plan calling for a 4 percent withdrawal surviving are very, very high. When the CAPE value is 44, the safe withdrawal rate is 1.6 and the odds of a plan calling for a 4 percent withdrawal surviving are not at all good.

I’ve already co-authored a calculator that gives the odds at the various CAPE levels. Had we opened every site to honest posting re the last 43 years of peer-reviewed research on the afternoon of May 13, 2002, we could have spent the last 22 years developing the Valuation-Informed Indexing concept and deepened and broadened our understanding of these issues in scores of amazing ways. Motley Fool called it “learning together.” All of the boards and blogs have the published rules that they have because they want to facilitate that process to the benefit of each and every one of us. The nasty Goon stuff takes things in the opposite direction and thereby holds us all back.

My sincere take.

Rob